Cato Gives Governor Chafee a D in Fiscal Policy

In a white paper out yesterday from the Cato Institute, Governor Lincoln Chafee (as the chief executive of the Rhode Island government) received a score of D for fiscal policy. His score of 41 is based on spending, revenue, and tax changes that he proposed and/or that were implemented under his watch over the two budget years since he took office, and marks him as the seventh worst governor for fiscal policy.

Report author Chris Edwards cautions, however, that the ranking is focused on short-term policies and does not reflect longer-term decisions such as pension reform. Additionally, to the extent that new taxes result from Governor Chafee’s emphasis on funding infrastructure without debt, his policy would likely have a minor and diluted negative effect, although it’s a positive development. The spending will appear in the score either way, but in the short-term, debt service tends to be less than taxation to fund the work.

Given the overwhelming Democrat majority in the General Assembly, giving the House and Senate leaders imbalanced power, the legislature must share in Gov. Chafee’s score to some degree. For instance, Cato counts both “proposed changes in per capita spending” and “actual changes in per capita spending.” In Rhode Island’s case, the final spending increase exceeded the proposed increase by 2.4 percentage points, helping Gov. Chafee to his F grade (29) in spending. However, Edwards tells the Current that his study averaged both years of proposed budgets but only included the fiscal year 2012 actual budget. In that year, the governor proposed a 7.0% increase, so the General Assembly only ratcheted it up by a half a percentage point.

Without the spending variable, Chafee still would have received a D, although more of a D+, as the average of his 44 in revenue and 51 in tax rate.

Note: This post was updated at 5:00 p.m. to incorporate specifics from a conversation with study author Chris Edwards. No changes of substance or conclusions were made.